2011 CFA Mock Exam - Afternoon Session - Question 51

CFA Level II
#1

Hi everyone,

Were there any changes made to question 51 from last year’s mock? The answer given does not seem to be correct.

There are two issues:

  1. In the solution, net increase in working capital is calculated as CA-CL.

Aren’t you supposed to use (CA-Cash) - (CL-Notes Payable-Current portion of Long Term Debt) instead?

  1. In the solution, net borrowing is calculated as (157.5-150) - (20-15).

Shouldn’t it be the change in LT Debt + the change in Notes Payable instead?

Side question: When asked to calculate the interest coverage ratio on the exam, should we use EBIT/(interest expense+capitalized interest)?

Please clearify these if you are 100% sure.

Thanks in advance!

G

#2

yes it’s in the errata

#3

Thanks! Do you have a link by any chance? Thanks!